2) Stammer Company uses three materials in the production of their product. The

Question

2)

Stammer Company uses three materials in the production of their product. The materials, A, B, and C, have the following standards:

Material

Standard Mix

Standard Unit Price

Standard Cost

A

5,000 units

$2.00 per unit

$10,000

B

3,000 units

4.00 per unit

$12,000

C

2,000 units

3.00 per unit

$ 6,000

9,000 units

During April, the following actual production information was provided:

Material

Actual Mix

A

40,000 units

B

20,000 units

C

10,000 units

Yield 60,000 units

Required:

Calculate the materials usage, mix, and yield variances.

Material

Standard Mix

Standard Unit Price

Standard Cost

A

5,000 units

$2.00 per unit

$10,000

B

3,000 units

4.00 per unit

$12,000

C

2,000 units

3.00 per unit

$ 6,000

Yield

9,000 units

Explanation / Answer

Standard Mix

A = (5,000/10,000) × (40,000 + 20,000 + 10,000) = 35,000
B = (3,000/10,000) × (40,000 + 20,000 + 10,000) = 21,000
C = (2,000/10,000) × (40,000 + 20,000 + 10,000) = 14,000

Materials yield variance:

(40,000 + 20,000 + 10,000) × 9,000/(5,000+3,0000+2,000) = 63,000
(63,000 - 60,000) × ($28,000/9,000) = $9,333(U)

Materials usage variance:

MUV= Mix variance + Yield variance
= $6,000 (F) + $9,333 (U) = $3,333(U)

Material AQ SM AQ - SM SP (AQ - SM)SP A 40,000 35,000 5,000 $2 $10,000 B 20,000 21,000 (1,000) $4 (4,000) C 10,000 14,000 (4,000) $3 (12,000) $6,000 (F)

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